IPOs rise, M&As decline, Dow Jones VentureSource says

BRADLEY J. FIKES bfikes@nctimes.com

On Wall Street, as in the clothing industry, fashions go in and out of style. The latest in-style fashion for investors is initial public stock offerings.

During the first quarter of 2012, 20 companies held their IPOs, the most since the fourth quarter of 2007, Dow Jones VentureSource
said Monday
. The companies raised a total of $1.4 billion. By comparison, 11 companies went public in the first quarter of 2011, raising a total of $768 million.

In the pipeline is an IPO by Carmel Valley-based
ServiceNow
, a "cloud"-based information technology company. ServiceNow filed its statement on March 30; presumably it will complete the offering sometime in the second quarter.

If the ServiceNow IPO goes through, it would be San Diego County's first since
The Active Network
, in Sorrento Valley, went public on May 25, 2011. Active Network, which makes software for organizing events and activities, saw its stock close Monday at $16.79, down 4 cents.

And worldwide, attention is focused on social networking site Facebook's
upcoming IPO
, which it filed on Feb. 1.

The resurgence of IPOs is easy to explain, said John E. Fitzgibbon Jr., a veteran IPO watcher: They're where the money is.

A strong stock market pulls in money from investors, including those buying into public offerings, said Fitzgibbon, founder of
IPOScoop.com
, a research firm that predicts the opening-day performance of IPOs.

"You don't have to look any further than the Nasdaq Composite," Fitzgibbon said. The tech-heavy Nasdaq is an indicator for IPOs, which are mainly technology companies.

"It's on a
12-year recovery high
, up 19 percent in the first quarter," said Fitzgibbon in comparing the quarter's performance against the quarter ended Dec. 31.

On Monday, the Nasdaq closed at 3,119.70, up 0.91 percent for the day. In March 2009, when Nasdaq began its rally, the index had dipped below 1,300.

What's out of fashion are mergers and acquisitions. During the first quarter of 2012, 94 companies were acquired for $18.1 billion. That's the second consecutive decline in deal volume, Dow Jones VentureSource said.

"Money became tight," Fitzgibbon said of the M&A market.

A combination of factors have led to the reversal in popularity between initial offers and mergers and acquisitions, said Jessica Canning, global research director for Dow Jones VentureSource.

"Greater stability in the public markets, more corporations opening venture units to work closely with startups without acquiring them, and a continued disconnect between entrepreneurs' asking price and what corporations are willing to pay have contributed to a steady decline in M&A activity," Canning said in a VentureSource
press release
.